tutu tuesday, august 14 whistle wednesday, august 15 · notice that the total benefit is more than...

Tutu Tuesday, August 14Whistle Wednesday, August 15● Warm up: Who still needs a textbook? I have more . . .● Learning targets: I can define positive and normative economics; I can define

marginal analysis and demonstrate a rational economic decision; I can demonstrate how individuals gain from voluntary, non-fraudulent trade.

● Two new homework assignments are posted in Verge. Please do not submit HW via email; I will not accept it. My preference is for you to turn it in using Verge; second choice is a hard copy.

While I’m Gone . . .

http://www.youtube.com/watch?v=3ez10ADR_gM

Micro vs. MacroMICROeconomics-

Study of small economic units such as individuals, firms, and markets. Examples- Supply and demand in specific industries, production costs, labor markets

MACROeconomics-Study of the large economy as a whole or economic aggregates.Examples- economic growth, government spending, inflation, unemployment, international trade

Copyright ACDC Leadership 2018

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Positive vs. Normative Positive Statements- Based on facts. Avoids value judgements (what is).Normative Statements- Includes value judgements (what ought to be).

How is Economics used? •Economists use the scientific method to make generalizations and abstractions to develop theories. This is called theoretical economics.•These theories are then applied to fix problems or meet economic goals. This is called policy economics.


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1. The rising price of crude oil on world markets will lead to an increase in gas prices.

2. A rise in average temperatures will likely increase the demand for sunscreen products.

3. Pollution is the most serious economic problem.

4. The government should ban smoking in public places.

5. Unemployment is more harmful than inflation.

Positive or Normative?


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Positive

Positive

Normative

Normative

Normative

HANDY DANDY GUIDE TO ECONOMIC REASONING

1. People choose. 2. People’s choices involve costs. 3. People respond to incentives in predictable ways. 4. People create economic systems that influence

individual choices and incentives. 5. People gain when they trade voluntarily. 6. People’s choices have consequences that lie in the

future.

5 Key Economic Assumptions1. Society has unlimited wants and limited resources

(scarcity). 2. Due to scarcity, choices must be made. Every choice has

a cost (a trade-off).3. Everyone’s goal is to make choices that maximize their

satisfaction. Everyone acts in their own “self-interest.”4. Everyone makes decisions by comparing the marginal

costs and marginal benefits of every choice.5. Real-life situations can be explained and analyzed

through simplified models and graphs.Copyright ACDC Leadership 2018

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1010


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SUPPLIES FOR CLASS

CLASS SUPPLIES

1. A 3-ring binder, either:a. A single binder with 5 sections just for this class

ORb. One section in a binder with four folders for storing

old units2. Paper3. Writing utensils4. 3x5 index cards5. Graph paper if you think you’ll want it

HOW DO WE LEARN?

This is just like AP ECON

Why?

The Cow Analogy

1. What happens in each of the five rounds?Round 1: Very few, if any, see it straight awayRound 2: Direct instruction works for a few Round 3: Questioning moves everyone forwardRound 4: Majority sees with direct explanation Round 5: Everyone sees when helping partner

2. Are you “smarter” than someone if you see the cow first?3. What is your responsibility when you see the cow?4. What four things did you do to “see the cow”?

Stay engaged. Ask questions. Get help. Be here.

What students really think about Econ!

Do you see the cow?

Price Level

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SRAS

GDPRQY

LRAS Inflation

SRPCUnemploymentUY

LRPC

Quick Practice with a Partner

5 Key Economic Assumptions1. Society has unlimited wants and limited resources

(scarcity). 2. Due to scarcity, choices must be made. Every choice has

a cost (a trade-off).3. Everyone’s goal is to make choices that maximize their

satisfaction. Everyone acts in their own “self-interest.”4. Everyone makes decisions by comparing the marginal

costs and marginal benefits of every choice.5. Real-life situations can be explained and analyzed

through simplified models and graphs.Copyright ACDC Leadership 2018

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HANDY DANDY GUIDE TO ECONOMIC REASONING

1. People choose. 2. People’s choices involve costs. 3. People respond to incentives in predictable ways. 4. People create economic systems that influence

individual choices and incentives. 5. People gain when they trade voluntarily. 6. People’s choices have consequences that lie in the

future.

LET’S TALK TRADE

Voluntary & Non-fraudulent Exchange

• Voluntary exchange: when individuals and businesses freely choose to exchange goods, services, resources, etc. for something of value (usually money)

• Non-fraudulent exchange occurs when both parties have complete information about what is being traded and its value (i.e., no fraud or cheating).

Voluntary Exchanges—Think About It

• When trade is voluntary and non-fraudulent, both parties benefit and are better off after the trade than they were before the trade.

Benefits of Voluntary Exchange:

• Encourages increased productivity and efficiency

• Encourages technological inventions and innovations

How do people benefit from trade?

Round 1 (2 min):

• In your notes, write down the item that you have and how satisfied you are with your item on a scale of 1 to 5 (5 is the highest satisfaction).

• You may trade only with people sitting next to, in front of or behind you in your section of the room.

• If you are happy with your item, you are not required to trade. All items have the same $ value.


Round 2 (3 min):

• Write down the item you have now and how satisfied you are with the item (1-5)– Do this even if you did not trade

• You may trade with anyone in your section of the room only. OR, you may keep your item.


Round 3 (5 min):

• Write down the item you have now and how satisfied you are with the item (1-5)– Do this even if you did not trade in the last round

• You may trade with anyone in the room. • Items available include Braves tix, Atlanta United

tix, men’s clothes, women’s clothes, athletic shoes, video games, make-up


• End of simulation:• Write down the item you have now and how

satisfied you are with the item (1-5)– Do this even if you did not trade in the last round

Trading Simulation Debrief/Ticket out the door

1. Did your satisfaction increase or decrease after round 1? Why?2. What changed from round 1 to round 2?3. Did your satisfaction increase or decrease after round 2? Why?4. What changed from round 2 to round 3?5. Did your satisfaction increase or decrease after round 3? Why?6. Was your satisfaction higher at the beginning of the simulation

or the end? Explain.7. Write 2-3 sentences about how this demonstrates the principle

that people gain from trade.

Thrifty Thursday, August 16Fried-egg Friday, August 17

See me if you need a textbook!!

Learning target: I can explain marginal analysis and make rational economic decisions with it. I can define trade offs and opportunity costs. I can make a chicken sandwich. I can describe the factors of production.

Homework due next week--see Verge

Let’s take a quick look at Verge

Now for some vocabulary . . .

CETERIS PARIBUS• Means other things being equal. In

economics, when you are working on a problem we must assume that only the variables mentioned in the problem will change. All others remain the same.– This will be relevant when we consider

Production Possibilities Curves

Trade-offs vs. Opportunity CostALL decisions involve trade-offs.

Opportunity cost- most desirable (2nd best) alternative given up when you make a choice.

Trade-offs - ALL the alternatives that we give up when we make a choice.

What are trade-offs of deciding to go to college? What is the opportunity cost of going to college?


What decisions did you make yesterday?

To snooze or not to snooze?Breakfast at home or fast food or none at all?

Buy or bring a lunch?Who to sit with at lunch?

Study or hang out with friends after school?Go to bed on time or watch Netflix?

Why do you have to choose to do some things and not others?

All of your choices involve a cost of some kind, even if it is not money...what are the costs?


Economics of College


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2008 Audit Exam


Practice Qs + Practice Sheet

2008 Audit Exam


Marginal ThinkingOR

Analyzing Choices

Marginal AnalysisIn economics marginal = additional

“Thinking on the margin”, or MARGINAL ANALYSIS involves making decisions based on the additional benefit vs. the additional cost.It is a rational economic decision to do something as long as your marginal benefit is greater than or equal to your marginal cost.

Eg: studying vs. sleeping.

You will continue to do something until the marginal cost outweighs the marginal

benefit.

Practice Problems on sheet . . .

Would you see the movie three times?Notice that the total benefit is more than the total cost after

you watch the movie the 2nd time, but you would NOT watch the movie the 3rd time because the cost outweighs

the benefit.

Thinking at the Margin# Times Watching

MovieBenefit Cost

1st $30 $102nd $15 $103rd $5 $10

Total $50 $30

Given the following assumptions, make a rational choice in your own self-interest (hold everything else constant)…1. You want to visit your friend for a week. You

will return Sunday night.2. You work every weekday earning $100 per day.3. You have three flights to choose from:

Thursday Night Flight = $275Friday Early Morning Flight = $300

Friday Night Flight = $325

Which flight should you choose? Why?Copyright ACDC Leadership 2018

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ChangeN/A$54$33

$15

$10

$5

Can you see the Law of Diminishing Marginal Utility in Disneyland’s pricing strategy?

Let’s Make that Chicken Sandwich

http://www.youtube.com/watch?v=URvWSsAgtJE

Write a paragraph about the guy who took six months and spent $1500 to make his own chicken sandwich from scratch. You should analyze his actions and include the concepts of opportunity cost and specialization in your response.

The 4 Factors of Production


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Want to Start a Cookie Business?1. What tools will you need?2. What skills do your workers they need?3. What does the owner need to do?

THESE ARE YOUR FACTORS OF PRODUCTION!!!


The Four Factors of ProductionALL resources can be classified as one of the following four

factors of production:

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1. Land -All natural resources that are used to produce goods and services. (Ex: water, sun, plants, animals, minerals)

2. Labor -Any physical or mental effort a person devotes to a task. (Ex: manual laborers, doctors, teachers, waiters, etc.)

Human Capital- Any skills or knowledge gained by a worker through education and experience.


3. Capital - Any human-made resource that is used to create other goods and services. (Ex: tools, tractors, machinery, buildings, factories, etc. AKA capital goods)

4. Entrepreneurship - People who assemble the other factors of production to create goods and services.

•Examples-Henry Ford, Bill Gates, your cousin who started her own catering business, etc.

The Four Factors of Production

Entrepreneurs:1. Take The Initiative2. Innovate3. Act as the Risk Bearers4. Assemble necessary FoP

So they can obtain _________.Profit = Revenue - Costs

PROFIT


Marginal Analysis

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tutu tuesday, august 14 whistle wednesday, august 15 · notice that the total benefit is more than...

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